Thoma Bravo’s Acquisition of Frontline Education Creates Edtech’s Newest Unicorn

Frontline Education is swapping one private equity owner for a bigger one. Today the Malvern, Penn.-based education company announced it will be acquired by Thoma Bravo, a major private equity firm with offices in San Francisco and Chicago. Terms of the deal were not disclosed, but Frontline CEO Tim Clifford tells EdSurge in an interview that “the company is valued in the unicorn range, well north of a billion dollars.”

Clifford says the company hired an investment bank last spring to help them sort through interest and solicitation from “a good deal of parties.” Thoma Bravo, which raised $7.6 billion last September to gobble up technology companies won out. “We are just absolutely thrilled that one of the largest software investors in the world has decided to partner with us,” he adds.

Founded in 1998, Frontline provides a suite of administrative and HR software for K-12 schools and districts. After private equity group Insight Venture Partners acquired a controlling stake in 2014, Frontline has gone on a shopping spree for companies whose offerings range from hiring and recruiting tools (Teachers-Teachers) to professional development providers (School Improvement Network and Teachscape) and special-education software (The Centris Group). The full list here:

Altogether the company says it serves more than 12,000 education organizations, with more than 5 million school employees and 1.2 million substitute teachers using its tools everyday. No doubt the acquisitions helped Frontline expand its footprint. Its revenue, according to Clifford, has been growing at 50 percent annually for the past several years.

Frontline currently numbers 650 employees in five offices across the U.S., a headcount will continue to grow. Insight Venture Partners will retain a minority stake in the company.

The company will “absolutely” continue looking for companies to buy, says Clifford, to support its next phase of growth in data analytics. With all the tools in its arsenal, “we’re starting to really mine the data to help teachers and principals make decisions and find ways to fine-tune their performance.” He believes one of the biggest pain points for educators is extracting actionable insights from the myriad technology software that schools and districts use today. “The biggest issue is integrating all that information.”

Frontline’s shopping frenzy is matched perhaps only by PowerSchool, which is currently owned by Vista Equity Partners and has shelled out around $1 billion on eight acquisitions since 2015. (Clifford says he hasn’t spent near that amount on his 10 deals.) Another equity group appears to be following this playbook: BV Investment Partners gave $150 million to Hero K12 in June and announced, rather brazenly, its intent to acquire companies.

There’s a new breed of funders, including private equity firms, that aim to build a “platform that brings together multiple businesses,” Jason Palmer, a partner at New Market Venture Partners, told EdSurge last month. “There’s a theory that if you establish a strong brand in one area, you can acquire others to create complementary services.”

Yet building a successful education business isn’t as simple as throwing a tranche of cash to buy new toys. “Anyone can come into a market like this and buy a bunch of parts,” says Clifford. “But it’s what you do with the parts that is the tricky part.” He predicts that “we’ll continue to see capital coming to companies,” but warns “it is difficult to launch yourself into the marketplace from a standing stop.”